SB460,2,44
2. “Employee ownership trust” has the meaning given in s. 73.17 (1) (e).
SB460,2,55
3. “Employee stock ownership plan” has the meaning given in s. 73.17 (1) (f).
SB460,2,66
4. “Qualified transfer” has the meaning given in s. 73.17 (1) (h).
SB460,2,77
5. “Tenured employee” has the meaning given in s. 73.17 (1) (i).
SB460,2,118
(b) 1. The department, any agency to which the department delegates
9purchasing authority under s. 16.71 (1), and any agency making purchases under s.
1016.74 shall attempt to ensure that 5 percent of the total amount expended under this
11subchapter in each fiscal year is paid to businesses that satisfy any of the following:
SB460,2,1412
a. A percentage, as established by the department by rule, of employer stock
13or membership interest, of the type required for a qualified transfer, is held by an
14employee stock ownership plan or employee ownership trust.
SB460,3,6
1b. A percentage, as established by the department by rule, of employer stock
2or membership interest, of the type required for a qualified transfer, is held through
3a direct share ownership plan where the ownership stake of the direct share
4ownership plan is calculated by determining the smallest amount of such stock or
5membership interest held by a tenured employee, multiplied by the total number of
6tenured employees.
SB460,3,107
c. A percentage, as established by the department by rule, of nonprofit
8corporation membership, with voting power equal to or in excess of that class of
9membership having the greatest voting power, is held by all tenured employees as
10a class, and the tenured employees vote as members on a one person, one vote basis.
SB460,3,2111
2. Except as provided under sub. (7), the department, any agency to which the
12department delegates purchasing authority under s. 16.71 (1), and any agency
13making purchases under s. 16.74 may purchase materials, supplies, equipment, and
14contractual services from any business specified in subd. 1. a., b., or c. submitting a
15qualified responsible competitive bid that is no more than 5 percent higher than the
16apparent low bid or competitive proposal that is no more than 5 percent higher than
17the most advantageous proposal. In administering the preference for businesses
18specified in subd. 1. a., b., and c. established in this paragraph, the department, the
19delegated agency, and any agency making purchases under s. 16.74 shall maximize
20the use of businesses specified in subd. 1. a., b., and c. that are incorporated under
21ch. 180 or that have their principal place of business in this state.
SB460,2
22Section 2
. 36.25 (54) of the statutes is created to read:
SB460,3,2523
36.25
(54) Center for employee ownership. (a) The board shall establish and
24maintain a center for employee ownership at a location within the system
25determined by the board.
SB460,4,1
1(b) The center for employee ownership shall do all of the following:
SB460,4,42
1. Provide education and outreach to inform business owners about the benefits
3of employee ownership successions and the provisions of ss. 16.75 (3r) (b), 71.05 (6)
4(b) 53. and 54., 71.26 (1) (ab) and (2) (a) 13., 14., and 15., 73.17, and 238.147.
SB460,4,55
2. Organize workshops and conferences on employee ownership successions.
SB460,4,76
3. Prepare and distribute materials concerning employee ownership
7successions.
SB460,4,98
4. Provide initial consultations to business owners exploring the possibility of
9transferring full or partial ownership to employees.
SB460,4,1110
5. Provide a referral service to help business owners find legal, financial, and
11technical advice in connection with employee ownership successions.
SB460,4,1412
6. Partner with key organizations, such as professional and trade associations,
13financial institutions, unions, economic development organizations, and other
14nonprofit entities, to promote employee ownership successions.
SB460,4,1515
7. Support the growth of associations of employee-owned companies.
SB460,4,1716
(c) In addition to its responsibilities under par. (b), the center for employee
17ownership shall do all of the following:
SB460,4,1918
1. Provide access to information regarding government rules and regulations
19that relate to employee ownership.
SB460,4,2120
2. Develop, in partnership with appropriate state and local government
21agencies, proposals for changes in policies to promote employee ownership.
SB460,4,2322
3. Conduct investigations, research, studies, and analyses on the subject of
23employee ownership.
SB460,3
24Section
3. 71.05 (6) (b) 53. of the statutes is created to read:
SB460,5,8
171.05
(6) (b) 53. For taxable years beginning after December 31, 2016, income,
2including all gains not excluded from taxation under subd. 9., derived from a
3qualified transfer, as defined in s. 73.17 (1) (h), except that the amount of income
4derived from the qualified transfer to a direct share ownership plan, as defined in s.
573.17 (1) (a), that may be excluded under this subdivision may not exceed the amount
6of income derived in the taxable year from the smallest amount of shares or member
7interests transferred to a tenured employee, as defined in s. 73.17 (1) (i), multiplied
8by the number of all tenured employees.
SB460,4
9Section
4. 71.05 (6) (b) 54. of the statutes is created to read:
SB460,5,1510
71.05
(6) (b) 54. For taxable years beginning after December 31, 2016, income
11derived from shares or member interests distributed through a direct share
12ownership plan, as defined in s. 73.17 (1) (a), except that the amount of the income
13that may be excluded under this subdivision may not exceed the amount of income
14derived in the taxable year from the smallest amount of shares or member interests
15distributed to a tenured employee, as defined in s. 73.17 (1) (i).
SB460,5
16Section 5
. 71.26 (1) (ab) of the statutes is created to read:
SB460,5,1817
71.26
(1) (ab)
Employee ownership trust. Income of an employee ownership
18trust, as defined in s. 73.17 (1) (e).
SB460,6
19Section
6. 71.26 (2) (a) 13. of the statutes is created to read:
SB460,5,2220
71.26
(2) (a) 13. For taxable years beginning after December 31, 2016, minus
21the amount of the interest income derived from an employee ownership loan, as
22defined in s. 73.17 (1) (d).
SB460,7
23Section
7. 71.26 (2) (a) 14. of the statutes is created to read:
SB460,6,324
71.26
(2) (a) 14. a. For taxable years beginning after December 31, 2016, minus
25the amount of contributions to an employee ownership trust, as defined in s. 73.17
1(1) (e), or to a direct share ownership plan, as defined in s. 73.17 (1) (a), including
2contributions applied to repayment of principal and interest on an employee
3ownership loan, as defined in s. 73.17 (1) (d).
SB460,6,94b. The exclusion under subd. 14. a. is subject to the limits under section
404 (a)
5(3) (A) of the Internal Revenue Code. The amount of the exclusion under subd. 14.
6a. for contributions to a direct share ownership plan may not exceed the value in the
7taxable year of the smallest amount of shares or member interests distributed to a
8tenured employee, as defined in s. 73.17 (1) (i), multiplied by the number of all
9tenured employees.
SB460,6,1310
c. Contributions under this subdivision may be in cash, shares, or member
11interests. For purposes of this subdivision, the taxpayer shall submit with the
12taxpayer's return a copy of the findings of an independent appraiser regarding the
13fair market value of shares or member interests.
SB460,8
14Section
8. 71.26 (2) (a) 15. of the statutes is created to read:
SB460,6,2115
71.26
(2) (a) 15. For taxable years beginning after December 31, 2016, minus
16the amount of dividends payable to an employee ownership trust, as defined in s.
1773.17 (1) (e), or to a direct share ownership plan, as defined in s. 73.17 (1) (a). The
18amount of the exclusion under this subdivision for dividends payable to a direct
19share ownership plan may not exceed an amount equal to the dividends payable to
20the employee owning the fewest number of shares, multiplied by the number of all
21tenured employees.
SB460,9
22Section
9. 73.17 of the statutes is created to read:
SB460,6,23
2373.17 Employee ownership. (1) Definitions. In this section:
SB460,7,324
(a) “Direct share ownership plan” means an arrangement in which a portion
25of the highest class of voting shares of a corporation or voting interest of a member
1of a limited liability company is held directly by all tenured employees. The shares
2or interest may be nontransferable and callable upon termination or retirement of
3the employee.
SB460,7,104
(b) “Eligible transaction” means the qualified transfer of some or all of the
5shares of a corporation or member interests of a limited liability company to an
6employee stock ownership plan, employee ownership trust, or direct share
7ownership plan. An eligible transaction includes an acquisition of shares or member
8interests by an employee ownership association, as an intermediary, for the purpose
9of a qualified transfer to an employee stock ownership plan, employee ownership
10trust, or direct share ownership plan.
SB460,7,1911
(c) “Employee ownership association” means a corporation, limited liability
12company, trust, or other entity that acts on behalf of the employees of an existing
13employer for the purpose of achieving the qualified transfer of some or all of the
14shares or member interests of the employer to ownership by an employee stock
15ownership plan, employee ownership trust, or direct share ownership plan. An
16employee ownership association includes a corporation or limited liability company
17with an existing employee stock ownership plan, employee ownership trust, or direct
18share ownership plan that acts on behalf of the employees of another employer for
19the purpose of achieving a qualified transfer by means of a consolidation or merger.
SB460,7,2020
(d) “Employee ownership loan” means any of the following:
SB460,7,2421
1. Any loan to a corporation, limited liability company, employee stock
22ownership plan, employee ownership trust, or employee ownership association, to
23the extent that the proceeds are used to acquire shares or member interests of an
24employer for a qualified transfer.
SB460,8,5
12. Any loan to a corporation or limited liability company to the extent that,
2within 30 days, shares or member interests of an employer are transferred to an
3employee stock ownership plan, employee ownership trust, or direct share
4ownership plan in an amount equal to the loan and in accordance with the terms of
5a qualified transfer.
SB460,8,96
(e) “Employee ownership trust” means a trust, including a foreign trust, that
7holds the highest class of voting shares of a corporation or voting interest of a member
8of a limited liability company and that meets the requirements under sub. (2) (a), and
9may be a noncharitable trust, perpetual trust, or both.
SB460,8,1110
(f) “Employee stock ownership plan” means an employee stock ownership plan,
11as defined in section
4975 (e) (7) of the Internal Revenue Code.
SB460,8,1312
(g) “Employer” includes 2 or more persons who are treated as a single employer
13under section
414 (b), (c), (m), or (o) of the Internal Revenue Code.
SB460,8,1714
(h) “Qualified transfer” means the transfer of any amount of shares of a
15corporation or member interests of a limited liability company to an employee stock
16ownership plan, employee ownership trust, or direct share ownership plan if all of
17the following apply:
SB460,8,2018
1. The shares or member interests have voting power equal to or in excess of
19the class of common shares or member interests of the employer having the greatest
20voting power.
SB460,8,2321
2. The shares or member interests have dividend rights equal to or in excess
22of the class of common shares or member interests of the employer having the
23greatest dividend rights.
SB460,9,224
3. If the transfer is to a direct share ownership plan, the largest amount of
25shares or member interests transferred to any employee does not exceed a multiple
1of 10 times the smallest amount of shares or member interests transferred to any
2tenured employee.
SB460,9,73
(i) “Tenured employee” means any employee or independent contractor who has
4provided at least 1,000 hours of services to the employer within the immediately
5preceding 12-month period unless, with respect to an employee ownership trust or
6a direct share ownership plan, a lower number of hours is established in the terms
7of the employee ownership trust or direct share ownership plan.
SB460,9,10
8(2) Employee ownership trusts. (a) Sections 71.05 (6) (b) 53. and 54. and 71.26
9(1) (ab) and (2) (a) 13., 14., and 15. apply to an employee ownership trust only if all
10of the following apply:
SB460,9,1411
1. a. Subject to subd. 1. b., c., d., and e., the employee ownership trust has the
12exclusive purposes of creating employee ownership by obtaining and holding shares
13or member interests of an employer and of promoting the financial and nonfinancial
14interests of all tenured employees.
SB460,9,1915
b. The exclusive purposes of an employee ownership trust may include
16preserving the ability of all tenured employees to exercise the voting rights of the
17trust on a one person, one vote basis. This subd. 1. b. does not exempt the trustee
18from an obligation to carry out the express terms and purpose of the trust in the case
19of a conflict with the majority decision of all tenured employees.
SB460,9,2220
c. The exclusive purposes of an employee ownership trust may include holding
21shares or member interests of an employer in perpetuity and preserving the
22employer in perpetuity.
SB460,9,2423
d. The exclusive purposes of an employee ownership trust may refer to both
24current and prospective tenured employees.
SB460,10,2
1e. An employee ownership trust may prioritize certain exclusive purposes over
2others.
SB460,10,83
2. No principal or income of the employee ownership trust is distributed or
4allocated to any party other than a tenured employee, except that principal and
5income of the trust may be distributed to one or more charitable organizations. The
6employee ownership trust may distribute principal to current and past tenured
7employees if the trust sells shares or member interests of the employer by
8establishing a cutoff date for the inclusion of past tenured employees.
SB460,10,119
3. Principal and income of the employee ownership trust that is distributed or
10allocated to employees is administered proportionally to all tenured employees on
11the basis of hours worked, salary, seniority, or any combination of these factors.
SB460,10,1512
(b) 1. An employee ownership trust may limit trustee liability in a manner
13authorized under subch. X of ch. 701 if the shares or member interests of the
14employer are voted by the trustee in accordance with the direction of all tenured
15employees and on a one person, one vote basis and all of the following apply:
SB460,10,1716
a. The trustee votes all employer shares or member interests as a unit in
17accordance with the majority decision of all tenured employees.
SB460,10,2518
b. Before voting, the trustee furnishes each tenured employee with the
19information statement and other materials provided to shareholders or members in
20connection with the shareholder or member meeting, together with a form on which
21confidential voting directions may be given to the trustee or, if the trustee is not
22independent of the employer, to an independent 3rd party designated by the trustee,
23who tabulates votes and provides instructions to the trustee. The trustee or a 3rd
24party may not disclose the confidential voting directions of any tenured employee to
25the employer.
SB460,11,3
12. This paragraph does not exempt the trustee from an obligation to carry out
2the express terms and purpose of the trust in the case of a conflict with the majority
3decision of all tenured employees.
SB460,11,64
(c) An employee ownership trust is not disqualified from any benefit available
5under s. 71.05 (6) (b) 53. or 54. or 71.26 (1) (ab) or (2) (a) 13., 14., or 15. solely because
6the terms of the trust do any of the following:
SB460,11,97
1. Authorize the trustee to employ an entity, such as a corporation, a limited
8liability company, or another trust, to hold the shares or member interests of the
9employer.
SB460,11,1110
2. Require that the employer obtain membership in one or more nonprofit
11associations.
SB460,11,1212
3. Require that the employer pay market rate wages or benefits or both.
SB460,11,1413
4. Require that the employer retain a percentage of annual net income as
14permanent reserves that will never be distributed to employees.
SB460,11,1815
5. Impose other requirements to promote the long-term financial health of the
16employer and the continued ability of the employer to provide high-quality jobs
17under conditions of employee ownership to all current and prospective tenured
18employees.
SB460,11,2019
6. Appoint a trust protector or cotrustee or both to enforce the trust and approve
20amendments to the trust.
SB460,10
21Section
10. 238.147 of the statutes is created to read:
SB460,11,23
22238.147 Employee ownership loans and loan guarantees. (1) 23Definitions. In this section:
SB460,11,2424
(a) “Eligible transaction” has the meaning given in s. 73.17 (1) (b).
SB460,11,2525
(b) “Employee ownership association” has the meaning given in s. 73.17 (1) (c).
SB460,12,1
1(c) “Employee ownership loan” has the meaning given in s. 73.17 (1) (d).
SB460,12,62
(d) “Total cost” means all reasonable and necessary costs to be incurred in the
3course of an eligible transaction, including the fair market value of the business
4interest to be acquired, as well as costs for any additional construction, land
5acquisition, improvements, equipment, pertinent rights and easements, and
6associated technical, engineering, legal, and financial services.
SB460,12,9
7(2) Establishment of program. The corporation shall establish and administer
8an economic development program under this section to make employee ownership
9loans and employee ownership loan guarantees to eligible applicants.
SB460,12,12
10(3) Application. Any corporation, limited liability company, trust, or employee
11ownership association may apply to the corporation for an employee ownership loan
12or employee ownership loan guarantee or both to finance an eligible transaction.
SB460,12,14
13(4) Loans and loan guarantees. The corporation may contract with an
14applicant under sub. (3) to do any of the following:
SB460,12,1715
(a) Make an employee ownership loan to the applicant equal to up to 40 percent
16of the total cost. At least 50 percent of a loan made under this paragraph shall be
17senior debt.
SB460,12,2018
(b) Guarantee up to 100 percent of employee ownership loans made to the
19applicant by lenders other than the corporation. All loan guarantees made to an
20applicant under this paragraph may not exceed 80 percent of the total cost.
SB460,13,4
21(5) Timeliness. The corporation shall make a loan decision or a loan guarantee
22decision under sub. (4), and inform the applicant of the corporation's decision, no
23later than 30 days after the corporation receives the applicant's application for an
24employee ownership loan or employee ownership loan guarantee under sub. (3). If
25the corporation requests that an applicant supplement its application by submitting
1additional information, the corporation shall have an additional 15 days after
2receiving the additional information by which the corporation must make a loan
3decision or a loan guarantee decision under sub. (4) and inform the applicant of the
4corporation's decision.
SB460,11
5Section
11.
Nonstatutory provisions.
SB460,13,96
(1)
Center for employee ownership. The Board of Regents of the University
7of Wisconsin System shall establish the center for employee ownership under section
836.25 (54) of the statutes no later than 180 days after the effective date of this
9subsection.